Owens Corning forecasts tightening supply in glass fiber market

An expanding economy, increased demand for composite products and limited supply caused by the rebuilding of older furnaces in China likely will lead to glass fiber price increases, says Owens Corning.

Related Topics:

During a special WebEx/Conference call with industry media at 9:00 a.m. (EST) on Friday, May 3, hosted by Owens Corning (Toledo, Ohio), representatives from Owens Corning's Composite Solutions share their insights on the opportunities for growth and market developments.

Owens Corning's group president Arnaud Genis moderated and responded to journalist's question, but the key presentation was given by Byron Hulls, the Composite Solutions business' director of market intelligence and innovation strategy. Hulls pointed to several factors emerging in the glass fiber market that indicate a potential tightening of supply that might cause an increase in prices over the next couple of years.

An expanding economy, a changing glass fiber supply picture in China and increasing demand for composite parts and structures are working together, he pointed out, to signal this potential change.

Hulls said market indicators forecast a growth in glass fiber demand of 5 to 7 percent CAGR from 2013 to 2014, with the wind energy, oil and gas, mining and water supply markets leading the way. Further, automotive production is on the rebound in every major market, Hulls reported, noting that glass fiber consumption currently averages 8 kg/18 lb per car globally and is expected to increase to 16 kg/36 lb per car by 2020. North American housing starts also are rising dramatically, and the average house, says Hulls, consumes about 100 kg/220 lb of glass fiber.

On the supply side, Owens Corning estimates that more than 20 percent of global glass fiber capacity will need to be rebuilt in China between 2013 and 2016, due, Hulls said, primarily to the maintenance needs of Chinese furnaces.

On top of this, Hulls noted that glass fiber manufacturing costs, on the whole, are rising. Further, composites are becoming more and more competitive with aluminum and steel, and profitability problems have forced some suppliers to consolidate or exit the market altogether.

The upshot, said Hulls, is that Owens Corning and other glass fiber suppliers likely will be forced to increase prices as demand increases and supply wanes. "In order for Owens Corning to improve its financial performance, inflationary costs must be recovered with an increased transparency of actions to our customers," he contended.